Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, March 22, 1992                   TAG: 9203220154
SECTION: VIRGINIA                    PAGE: A-4   EDITION: METRO 
SOURCE: By CHARLES HITE MEDICAL WRITER
DATELINE:                                 LENGTH: Medium

TASK FORCE SUGGESTS STEPS FOR MANAGING CONTROLS BETTER

Requiring insurance companies to disclose criteria they use in deciding whether to pay for health care services was one of several recommendations the task force made to the General Assembly about ways to improve public confidence in managed care programs.

The report suggested using a single form to replace the many hundreds of health insurance claims forms in use.

And it said insurers could avoid spending huge amounts of time and money in reviewing every patient's case by setting up a system that took random samples or looked only at cases falling outside certain guidelines.

"Managed care is fine," said Richard Morrison, the lead staff member for the study by the Department of Health Professions. "But there is a lot of administrative inefficiency in the system as it is operating."

Morrison pointed to the practice of reviewing each case before approving health insurance benefits as an example of inefficiency. A system of random sampling could achieve the same results at less cost, he said. "The IRS doesn't audit every taxpayer."

The task force defined managed care as procedures and paperwork used by businesses and insurers to contain health care costs. It includes reducing payments to health-care providers, denying payments for services that appear unnecessary and using financial incentives to promote cost-effective services.

"Doctors tend to see managed care as `interference' in medical decision-making by remote parties who may not be attuned to the individual differences in patients' conditions and support structures," the task force study said.

Insurers see managed care as "necessary to promote `efficient, cost-effective' care" by providers who, at least in the past, have been wasteful in delivering care, the report added.

Caught in the middle, the report said, are patients who felt "victimized by uncaring functionaries who stood between them and the care they wanted and deserved."

The task force study was referred to a joint committee of the General Assembly that is studying health-care costs. Morrison expects the committee to take up some of the study's recommendations in the 1993 legislative session.

The study said managed care "has clearly demonstrated its effectiveness" in slowing the rate of health-care cost increases for "insured or entitled populations."

Less clear, the study added, was whether cost savings from managed care resulted from lowering costs or from simply shifting the costs to state and federal programs that provide health care to indigent or disabled patients.

The study also noted there is a debate over whether the benefits of managed care are offset by increases in administrative costs. By some estimates, 20 percent or more of the health-care dollar is eaten up by paperwork and other costs of administration, a recent Wall Street Journal article said.

The insurance industry was critical of many of the task force findings. Industry representatives rejected the premise that administrative costs, unnecessary paperwork or other "hassles" impeded the cost-saving potential of managed care.

The task force study downplayed the positive benefits of managed care, especially its role in helping coordinate patient care and providing better quality care, said Teresa DiMarco, vice president for health benefits management for Blue Cross and Blue Shield of Virginia.

DiMarco defended the practice of reviewing cases while a patient is receiving treatment, claiming that was more cost-effective than reviewing medical files after a patient had already left the hospital.

Blue Cross voluntarily makes available to physicians and hospitals the criteria it uses in deciding benefits, DiMarco said. But Blue Cross does not feel sharing its criteria with anybody should be mandatory, she added, noting the State Corporation Commission had studied the issue and decided against forced disclosure of criteria.